Comdoll Trading Kit (June 11-15, 2012): Midweek Market Analysis

With barely any report coming from major economies, what market themes have been getting the investors’ attention so far this week?

Midweek Market Analysis

“Bailout Lite” in Spain
Risk sentiment started the week on the wrong side of the charts as Spain’s “bailout lite” program backfired not only on high-yielding currencies, but also bond yields, commodities, and the stock market. Apparently, investors think that a bailout lite will soon lead to a full-scale bailout for the euro zone’s fourth largest economy. Uh-oh.

QE3 by next week?
Aside from profit-taking ahead of the Greek elections this weekend, QE3 speculations enabled high-yielding currencies to snatch back some pips from the Greenback. Will the Fed be more QE3-friendly in the FOMC statement next week? Traders seem to think so! We still have a couple of huge events coming up though, including the Greek elections and the G20 meeting so we better keep our fingers crossed!

Comdolls are riding the risk sentiment waves
As I mentioned in the calendar update last Monday, the commodity-related countries barely have anything on tap this week, which is probably why the comdolls have been trading on risk sentiment.

After plunging against the Greenback on Monday, the Aussie, Loonie, and Kiwi managed to pick up momentum and are actually ahead today. AUD/USD is up by 1.00% this week, USD/CAD is down by 0.42%, and NZD/USD is also up by 0.85%. Will the profit-taking and optimism continue till the end of the week?

Potential Trade Setups

AUD/USD: Double Top FormationAUD/USD may have gapped up over the weekend but this gap was quickly filled yesterday as we saw another reject of the 1.0000 handle. I’m seeing a double top formation on the 1-hour chart, but this reversal pattern has yet to be confirmed since the pair hasn’t broken below the neckline just above .9800. See the setup

USD/CAD: Mixed Signals!On one hand, there’s a double bottom formation as the pair bounced a couple of times off the 1.0200 major psychological support, signaling that an uptrend could be in the cards. There’s also a bullish pennant sitting close to the formation’s neckline at 1.0350. See the setup

NZD/USD: Divergence & Trend LineThe pair found support at the .7700 major psychological level, which was right in line with the trend line. With price making higher lows and stochastic making lower lows, a bullish divergence has formed, hinting that NZD/USD could be headed further north. See the setup.

Comdoll Event Highlights for June 11 to 15, 2012

The comdolls will probably trade on risk sentiment for the first couple of days as there are no major reports on tap. Be alert later in the week though, as we’ll see the RBNZ’s rate decision plus a couple of reports from China, Canada, and the U.S.!

Do you think I should grab the opportunity to play the news this week? These comdoll levels could guide us in spotting setups and making trade decisions in the coming days so make sure you mark ’em on your charts!

Significant Levels to Watch Out For

AUD/USD

USD/CAD

NZD/USD

Week Open (WO)

0.9986

1.0241

0.7759

Previous Week High (PWH)

1.0004

1.0447

0.7754

Previous Week Low (PWL)

0.9628

1.0210

0.7501

Top Weekly ATR (tWATR)

1.0109

1.0327

0.7860

Bottom Weekly ATR (bWATR)

0.9862

1.0154

0.7658

Other significant levels

1.0000, 0.9850

1.0350, 1.0200

0.7800, 0.7640

In case you’re wondering what ATRs are all about and how I computed those figures, make sure you check out my entry explaining my trading strategies.

If you’ve got any trade setups you’d like to share, you know where to reach me!

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.

About Happy Pip

I am HappyPip, lady trader of the Commodity Dollars or "ComDolls!" We will look at price action of the Australian Dollar, New Zealand Dollar, and the Canadian Dollar, as well as their respective economies, and how commodities prices may affect their long term movements. Put on a "happy face" and come join me, won't ya! :)

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